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USDA Reports to Send Shock Waves through Corn Markets

June 30, 2011
By: Fran Howard, AgWeb.com Contributing Writer

Between this morning’s Acreage and Grain Stocks reports, the U.S. corn supply for the 2011-12 corn year is close to 0.5 billion bushels higher than the industry anticipated.

First, corn stocks in all positions as of June 1, 2011, totaled 3.67 billion bushels, down 15 percent from a year earlier. On-farm stocks at 1.68 billion bushels fell 21 percent from a year earlier, while off-farm stocks, at 1.99 billion bushels, are 9 percent lower. Grain stocks, however, were well above the average trade estimate of 3.3 billion bushels. “The big shocks are in the corn numbers,” says James Bower, Bower Trading, Lafayette, Ind.
 
Soybean stocks of 619 million bushels and wheat stocks of 861 million bushels were also well above expectations of 596 million bushels and 826 million bushels, respectively. “What that shows is that feed demand backed off this spring when prices were high, especially for cattle producers,” says Chad Hart, agricultural economist with Iowa State University. “Producers likely turned to unique alternative feed sources such as processed feed, byproducts, and bakery waste. They were searching for any alternative feed source.”
 
Projected corn acres of 92.3 million will also send shock waves through the market. Projected acreage is 5 percent stronger than last year and the second highest planted acreage since 1944, behind only 2007’s 93.5 million acres. Growers expect to harvest 84.9 million acres for grain, an increase of 4 percent from last year. The average trade estimate for corn acres was 90.8 million.
 
“I’m sure the report is a disappointment to corn bulls,” says Bower. “It shows us that in the Northern Hemisphere if the producer gets an opening, he or she has the horse power to make up (planting delays) in a big way.” According to the Acreage report, even with this year’s significant planting delays, U.S. producers planted 1.6 million more acres than they indicated in the March Prospective Plantings report.
 
“The markets will focus on the corn numbers, which are bearish,” says Bower. Without weather problems during the critical upcoming pollination period, which Bower expects to run from about July 11 to August 14 this year, December corn futures could fall to as low as $5.50 or $5.40, given today’s bearish numbers, he says.
 
“If you go through the report on a state-by-state basis, you can see the impact of (planting-season) weather on some states and how other states compensated for that,” says Hart. For instance, Illinois, Ohio, South Dakota, and North Dakota all lost acreage, while Iowa, Nebraska, and Minnesota gained acres.

The additional corn acres also came at the expense of soybean acreage. “Producers gave up beans and planted corn later than they normally would have in a more typical year,” Hart says. “Prices favored corn this spring and producers responded.” USDA pegged soybean planted acres at 75.2 million acres, down 3 percent from last year.
 
Yield will be a concern in many states moving forward, including Minnesota, North Dakota, and South Dakota, but other states like Iowa, where producers planted an additional 200,000 acres, and Nebraska could make up for yield losses elsewhere. “Minnesota corn got in, but it isn’t necessarily in the best condition,” says Hart, who will be revising his price forecast lower in the wake of today’s reports.
 
“The wildcard is the 500,000 added acres in Nebraska,” Hart says. “How much of it was planted in the (now-flooded) Missouri River valley?”
 

 

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RELATED TOPICS: Corn, Soybeans, Wheat, Marketing, Crops, USDA

 
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COMMENTS (12 Comments)

Smallest Dairy Farmer
Well USDA..........not popular with this report.....I just hope they're right.
Seriously, all commodities have a resistance or shall we say a point when the end user cannot continue to use or not be able to use as much. This is a risky place, because alternatives are tried that may work just as well profit wise. Lower corn price may not bring back the whole demand there once was, if alternative practices succeed.

I noticed that a lot of my range cows friends have planted corn for the first time in ND, to raise the corn for feed for themselves. More corn in my area (western ND) then I ever seen before. So I guess the part about NY & at least ND stating the biggest corn acres for these two states is correct. I guess the beef guy's reaction to grow their own corn is a good idea for dairies with acres for production as well.

Another thing worth noting......if the report of the most corns acres being the highest ever except for the 93 corn crop, that was 16 years ago. Imagine the technology and yield potential that exists for these 2011 reported acres.

A very wise Agwebber here is fond of saying....."Nothing cures high prices like high prices" & vise versa.
12:07 PM Jul 1st
 
Smallest Dairy Farmer
Well USDA..........not popular with this report.....I just hope they're right.
Seriously, all commodities have a resistance or shall we say a point when the end user cannot continue to use or not be able to use as much. This is a risky place, because alternatives are tried that may work just as well profit wise. Lower corn price may not bring back the whole demand there once was, if alternative practices succeed.

I noticed that a lot of my range cows friends have planted corn for the first time in ND, to raise the corn for feed for themselves. More corn in my area (western ND) then I ever seen before. So I guess the part about NY & at least ND stating the biggest corn acres for these two states is correct. I guess the beef guy's reaction to grow their own corn is a good idea for dairies with acres for production as well.

Another thing worth noting......if the report of the most corns acres being the highest ever except for the 93 corn crop, that was 16 years ago. Imagine the technology and yield potential that exists for these 2011 reported acres.

A very wise Agwebber here is fond of saying....."Nothing cures high prices like high prices" & vise versa.
12:06 PM Jul 1st
 
PullMyFinger - Chappell, NE
USDA. A great place for the cuts to begin.
10:23 PM Jun 30th
 
PullMyFinger - Chappell, NE
Shocked by something the USDA said? Where have you been for the past 60 years? Have they EVER been right about ANYTHING?
10:18 PM Jun 30th
 
WILLIAM - JEFFERSON, SD
I would add that I agree that the usda is slanderously controlling prices with their outlandish acreage and yield projections. It is absolutely ludicrous to assume that current planted acres will result in even close to trend-line yields. There are so many unaccounted for zero acres it's ridiculous. I could go on and on but to no avail. Good luck to all....I need to go pump out my basement again....not to mention the 100s of acres I have of flooded crops that apparently will be fine with two or more months of flood water upon them.
7:49 PM Jun 30th
 
WILLIAM - JEFFERSON, SD
total bs by the ever present usda.....I happen to live in the Missouri river basin and i can tell you for a fact that many many thousands of acres are impacted significantly by the historically high water levels currently being endured by residents as well as farmers. This flood will put the flood of 1952 to shame in terms of economic impact for sure. I allowed my Missouri river home basement to fill today with the relentless high water levels and resulting impact.
7:37 PM Jun 30th
 
Milton - Alexandria, SD
I do not believe all the PP acres have been reported yet so are they guessing the acres not planted?
7:30 PM Jun 30th
 
Milton - Alexandria, SD
I do not believe all the PP acres have been reported yet so are they guessing the acres not planted?
7:30 PM Jun 30th
 
Tiny
Talk to a farmer. Did any of them plant fewer corn acres when they were done than what they thought in March? Most planted a few more. Most farmers aren't fond of having to harvest soybeans. As for the stocks. . . .who is using corn when it is $7.00 ? There should be more of it setting in bins.

7:27 PM Jun 30th
 
Tiny
Talk to a farmer. Did any of them plant fewer corn acres when they were done than what they thought in March? Most planted a few more. Most farmers aren't fond of having to harvest soybeans. As for the stocks. . . .who is using corn when it is $7.00 ? There should be more of it setting in bins.

7:27 PM Jun 30th
 



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